20000309

FPCCI fears proposed insurance act will create cartels

HUMAYUN JAVID

ISLAMABAD: The Federation of Pakistan Chambers of Commerce and Industry fears that implementation of the proposed insurance act will create cartels in insurance industry in Pakistan.

FPCCI's Insurance Standing Committee Chairman Sheikh Humayun Sayeed has written a letter to Commerce Minister Abdul Razak Dawood expressing concern over the new insurance act. The letter states that the proposed insurance act is tailor made to suit very few national and international companies and to deprive thousands of employees and agents of their livelihood.

Sayeed has said in his letter that the basic defect in the proposed act is that it has been devised for the developed and documented economies, and in Pakistan where there is no documentation and very small share market of premium, the proposed act cannot be adopted.

He suggested that the existing Insurance Act 1938 should be revised with few amendments. He suggested that a reasonable and justified period be granted to the insurance companies to enhance their paid-up capital, and the existing provision of Insurance Act 1938 should be retained and every insurer be made to invest one percent of retained premium income in approved securities.

In order to give solid security to the policy holders, Sayeed suggested that a minimum amount of premium written in any year should not be more than three times of the net worth of the company. He suggested that the private sector should be allowed to arrange their reinsurance without any interference by the government.

He also suggested that an 'excess capacity pool' to be operated by the private sector and to be created to save foreign exchange and to develop Private Insurance Sector. "A claim settlement committee should be formed consisting of nominees of the trade and industry by FPCCI for prompt settlement of the claims."

He said the proposed insurance act should simultaneously apply to Pakistan Insurance Corporation and National Insurance Corporation at par. The private sector should be allowed to underwrite the interest and property of public sector, vice versa the public sector may also under write private sector business.-Fortuna